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Bitcoin 101- the Ultimate Guide for Everything You Need to Know

Netizens have heard a lot about the buzzing word- bitcoins, the digital currency. Now that you’re talking of digitalization, it means that these exist electronically. To be precise, bitcoins are a cryptocurrency that implies encryption and security.

If you’re in Romania and are paving a path with Bitcoins, here are some things that should be on your list.

Bitcoins are a fascinating, new-age currency that exists only on online platforms and allows users to remain anonymous. This new-fangled monetary equipment helps you exchange money and get involved in transactions that are different from those you usually do. Thus, it would help if you took time to inform yourself of these and how to use them. Let’s get started with what these are:

What are bitcoins?

Bitcoin (capitalized) is a network or software known as the Bitcoin Network, while the non-capitalized network refers to the digital currency. These types of cryptocurrency suffer from price fluctuations, which are primarily dependent on the price, people are willing to pay for these. Bitcoins can be traded for some pennies (during their initial stages) to as high as 20,000 USD.

Who conceived the idea of bitcoins?

Satoshi Nakamoto conceptualized as the man behind the idea of bitcoins. He shared a white paper, a PDF about Bitcoins, in May 2008, which he sent without disclosing his identity. He outlined the currency’s working while emphasizing that the Bitcoins would be “mined” using computer software, which will transfer directly amongst uses and be recorded in an untameable ledger without needing a third party for the same.

Satoshi Nakamoto disappeared after sharing his selfless act that brought the world a step closer to the financial revolution.

In May 2016, Australian entrepreneur Craig Wright’s claim came as a shock as being a Bitcoin community creator. Some people believed his claim to be true while others did not- all thanks to the Bitcoin ecosystem’s decentralization. They further emphasized that it cannot be controlled by a person, not even the creator.

What are the ways of getting Bitcoins?

Now that you’re a Romanian citizen, you wonder about the possible ways of getting bitcoin. You can either buy these with cash or credit card, debit cards, and wire transfers. However, you’ll first have to establish a wallet, which will help in the wallet ID’s derivation. A wallet is nothing but a place for storing your cryptocurrency in the same manner as your wallet holds your credit cards and cash.

Some of the main options can be:

  1. a software wallet that finds its storage on your computer’s hard drive
  2. A web-based service
  3. A vault service that protects your bitcoins offline or through a multi-sig wallet that employs several keys to protect the account.

Each method comes with its unique advantages and disadvantages, but the third option has the most benefits as long as you’re not looking for anonymity, and the long-setup option is not to mention. Some people, however, believe in erasing the Bitcoin point and its anonymity.

Now that you’re looking out to invest in Bitcoins, right from the comforts of your Romania home, you wonder what the price of a single bitcoin is. Well, that question is a little hard to answer because of the regular price fluctuations.

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Can you “Mine” It?

The act of bitcoin mining is similar to digging the same for gold online. And that’s the main reason for calling it “mining.” With the presence of paper money, authorities take the decision of printing and distributing money.

Note that this digital currency doesn’t need a central regulator, allowing anyone to begin mining. The bitcoin miners employ special software for solving mathematical problems, and they get a certain number of Bitcoins for solving them correctly. The bitcoin puzzles aren’t that easy to solve and require a particular software, as mentioned above. These problems are challenging to solve, which means that you can’t accomplish these on your own. Instead, with “mining pools” arising, the groups split computing power after witnessing the problem’s solution.

Another myth that surrounds people’s mindset is that mining Bitcoins are easy ways of getting rich. Instead, you may spend on specialized computer equipment for starting over than mining Bitcoin itself.

What is Bitcoin’s tax regime in Romania, and how are these Bitcoin transactions taxed?

Now that you’ve made up your mind to purchase Bitcoins- the new-fangled digital currency, it is vital to know the country’s tax regime.

Before January 2019, the Romanian tax legislation imposed no regulations on how people made profits from trading Bitcoins and other virtual currencies. Nevertheless, it becomes important to take note of the fact that Bitcoin taxation in Romania is prevalent. The cryptocurrency taxation wasn’t mentioned in the tax legislation and didn’t mean that associated authorities could not impose taxes on these gains. The Romanian Tax Code didn’t include these in the precisely defined income category but also didn’t exclude the same from the general taxation rule.

Know that the gains you’ll derive from Bitcoins buying and selling or other types of cryptocurrency like Ripple, Litecoin, Ethereum, etc., will be considered taxable income and will find taxes as income from other sources. Also, note that this provision is suitable for digital currencies before January 2019.

From January 20, 2019, based on Ordinance No 25/2018, which amended the country’s tax code, the income derived from digital currencies transfer was regarded for the first time, belonging to tax perspective. Paragraph 2 of Article 114 of the Romanian Tax code talks about the income tax due to revenues generated in the year 2019. Also, under the new-fangled letter, starting with the year 2019’s gains, it was clarified by the authorities that income from the transfer of digital currencies is taxable under “income from other sources.”

Should you invest in Bitcoin?

Now that you’re aware of the Bitcoin basics and the taxation regulations in your home country- Romania, you might be wondering if it’s a suitable investment for you. However, before you set foot into bitcoin investment, here are some things that you need to know:

  1. It can be pretty expensive to Mine Bitcoins
  2. No agency regulates Bitcoins
  3. Bitcoins have a high demand
  4. Bitcoin payments are irreversible 

Wrap Up

Bitcoins have been extremely popular- all thanks to their relative anonymity, which allows easy purchases. Bitcoin is cool, but something that’s even more cooler is its underlying technology- the blockchain. What’s even better is that there’s a method for recording data, which cannot be tempered or played with. The good thing is that it is a cost-effective method of storing information.

What do you think of bitcoin? Share your thoughts!

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